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Definition of Back-up
1) When bond yields and prices fall, the market is said to back-up.
Total quantity of goods and services supplied.
Combinations of price level and income for which the labor market is in equilibrium. The short-run aggregate supply curve incorporates information and price/wage inflexibilities in the labor market, whereas the long-run aggregate supply curve does not.
Bond or note secured by assets of company.
A security that is collateralized by loans, leases, receivables, or installment contracts
The fee paid on the extension date if the buyer wishes to continue the option.
The subsequent subtraction from inventory records of those parts used
Brokerage house clerical operations that support, but do not include, the trading of stocks and
This term refers to the simultaneous issue of a life annuity with a non-guaranteed period and a guaranteed life insurance policy [usually whole life or term to 100]. The face value of the life insurance would be the same amount that was used to purchase the annuity. This combination of life annuity providing the highest payout of all types of annuities, along with a guaranteed life insurance policy allowed an uninsurable person to convert his/her RRSP into the best choice of annuity and guarantee that upon his/her death, the full value of the annuity would be paid tax free through the life insurance policy to his family members. However, in the early 1990's, the Federal tax authorities put a stop to the issuing of standard life rates to rated or uninsurable applicants. Insuring a life annuity in this manner is still an excellent way to provide guaranteed tax free funds to family members but the application for the annuity and the application for the life insurance are separate transactions and today, most likely conducted through two different insurance companies so that there is no suspicion of preferential treatment given to the life insurance application.
An intercompany loan channeled through a bank.
A loan in which two companies in separate countries borrow each other's currency for a
A procedure for making the effective date of a policy earlier than the application date. backdating is often used to make the age of the consumer at policy issue lower than it actually was in order to get a lower premium.
a streamlined cost accounting method that speeds up, simplifies, and reduces accounting effort in an environment that minimizes inventory balances, requires
A market condition in which futures prices are lower in the distant delivery months than in
State of being unable to pay debts. Thus, the ownership of the firm's assets is transferred from
The reorganization or liquidation of a firm that cannot pay its debts.
Bankruptcy cost view
The argument that expected indirect and direct bankruptcy costs offset the other
The risk that a firm will be unable to meet its debt obligations. Also referred to as default or insolvency risk.
The argument that expected bankruptcy costs preclude firms from being financed entirely
Bottom-up equity management style
A management style that de-emphasizes the significance of economic
Another term for a repo.
a system using transfer prices; see transfer
The periodic interest payment made to the bondholders during the life of the bond.
Detachable certificate attached to a bond that shows the amount of
The interest payments paid to the bondholder.
The annual interest payment associated with a bond.
Any bond with a coupon. Contrast with discount bond.
Coupon / Coupons
The periodic interest payment(s) made by the issuer of a bond
The dates when the coupons are paid. Typically a bond pays
Coupon equivalent yield
True interest cost expressed on the basis of a 365-day year.
A bond's interest payments.
In bonds, notes or other fixed income securities, the stated percentage rate of interest, usually
The rate of interest paid on a debt security. Generally stated on an
The nominal interest rate that the issuer promises to pay the
Annual interest payment as a percentage of face value.
A bond selling at or close to par, that is, a bond with a coupon close to the yields currently
Related: Benchmark issues
Discounted payback period rule
An investment decision rule in which the cash flows are discounted at an
With respect to a project financing, an arrangement under which the sponsors of a project
Dupont system of financial control
Highlights the fact that return on assets (ROA) can be expressed in terms
Refers to the investors percentage ownership of a company that can be re-acquired by the company, usually at a pre-determined amount.
equivalent units of production (EUP)
an approximation of the number of whole units of output that could have been
Buying or selling to offset an existing market position.
A situation in which supply exceeds demand.
The retrospective process of measuring performance, comparing it with plan and taking corrective action.
The amount of securities believed to be available for immediate purchase, that is, in the
Foreign Corrupt Practices Act (FCPA)
a law passed by U.S. Congress in 1977 that makes it illegal for a U.S. company to engage in various “questionable” foreign payments and
Full coupon bond
A bond with a coupon equal to the going market rate, thereby, the bond is selling at par.
The loss in yield that occurs when a block of bonds is swapped for another block of lower-coupon
Group Life Insurance
This is a very common form of life insurance which is found in employee benefit plans and bank mortgage insurance. In employee benefit plans the form of this insurance is usually one year renewable term insurance. The cost of this coverage is based on the average age of everyone in the group. Therefore a group of young people would have inexpensive rates and an older group would have more expensive rates.
Group of five (G5/G-5)
The five leading countries (France, Germany, Japan, United Kingdom, and the U.S.) that
Group of seven (G7/G-7)
The G-5 countries plus Canada and Italy.
Group rotation manager
A top-down manager who infers the phases of the business cycle and allocates
High-coupon bond refunding
Refunding of a high-coupon bond with a new, lower coupon bond.
A legal proceeding for liquidating or reorganizing a business.
Bond with a stream of coupon payments that are the same throughout the life of the bond.
Limitation on sale-and-leaseback
A bond covenant that restricts in some way a firm's ability to enter into
CDs that are issued with the tacit understanding that the buyer will not trade the certificate.
1) Bonds or notes with a long current maturity.
1) Bonds or notes with a long current maturity.
An option that allows the buyer to choose as the option strike price any price of the
The offsetting of a current year loss against the reported taxable
Low-coupon bond refunding
Refunding of a low coupon bond with a new, higher coupon bond.
The amount added to a lower figure to reach a higher figure, expressed as a percentage of the
the period after an announcement of a takeover bid in which stock prices typically rise until a merger or acquisition is made (or until it falls through).
An increase in the cost of a product to arrive at its selling price.
M1-A: Currency plus demand deposits
Securities backed by a pool of mortgage loans.
Mortgage-Backed Securities Clearing Corporation
A wholly owned subsidiary of the Midwest Stock
Normal backwardation theory
Holds that the futures price will be bid down to a level below the expected
The cost of the supplies used in running an office.
A type of insurance policy or annuity in which the owner receives dividends, typically increases the death.
That part of the issued capital of a company that has been paid up by the shareholders.
Pass-through coupon rate
The interest rate paid on a securitized pool of assets, which is less than the rate
The loss of cash resulting from a swap into higher price bonds or the need/willingness of a bank or
The length of time it takes to recover the initial cost of a project, without regard to the time value of money.
A method of investment appraisal that calculates the number of years taken for the cash flows from an investment to cover the initial capital outlay.
The length of time required for the net revenues of an investment for the net revenues of an investment to return the cost of the investment.
A capital budgeting analysis method that calculates the amount of
The number of years necessary for the net cash flows of an
the time it takes an investor to recoup an
Time until cash flows recover the initial investment of the project.
The gain in yield that occurs when a block of bonds is swapped for another block of higher-coupon bonds.
Related: retention rate.
Fraction of earnings retained by the firm.
A bankruptcy in which a debtor and its creditors pre-negotiate a plan or
Pure yield pickup swap
Moving to higher yield bonds.
Raw material supply agreement
As used in connection with project financing, an agreement to furnish a
Real Money Supply
Money supply expressed in base-year dollars, calculated by dividing the money supply by a price index.
the period before a formal announcement of a takeover bid in which one or more bidders are either preparing to make an announcement or speculating that someone else will.
Sale and lease-back
Sale of an existing asset to a financial institution that then leases it back to the user.
Sale and Leaseback
An agreement in which the owner of a property sells that property to a person or institution and then leases it back again for an agreed period and rental.
All banks involved in selling or marketing a new issue of stock or bonds
The time required to make ready a machine or process for production, e.g. changing equipment
the direct or indirect cost of getting equipment
The cluster of one-time costs incurred whenever a production batch is run,
Costs related to such onetime activities as opening a new facility, introducing
To increase, as in step up the tax basis of an asset.
A bond that pays a lower coupon rate for an initial period which then increases to a higher
Stripped mortgage-backed securities (SMBSs)
Securities that redistribute the cash flows from the
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